CEO Explanation Business Results & OutlookDental Material Market：800 billion yen ①Acquisition of...

1

November 20, 2013Toshikazu Tanaka

President & CEO

Mitsui Chemicals

CEO ExplanationBusiness Results & Outlook

2

1.Financial Result & Outlook for FY20132.Progress of Mid-Term Business Plan3.Investment Plan and Financial Status

3

Results of 1st Half of FY2013 & Forecast for FY2013

（billion yen） ( ) Denotes a minus

FY2012 FY2013 Increase(decrease)

1st Half Full year 1st Half Full year 1st Half Full year

Sales 680.5 1,406.2 731.6 1,550.0 51.1 143.8

Operating income 1.5 4.3 11.0 25.0 9.5 20.7Non-operatingincome/expenses (4.0) 4.9 (0.3) (4.0) 3.7 (8.9)

Ordinary income(loss) (2.5) 9.2 10.7 21.0 13.2 11.8

Special gains/losses (9.0) (10.0) (2.4) (7.0) 6.6 3.0Net income(loss) beforeincome taxes and minorityinteres

(11.5) (0.8) 8.3 14.0 19.8 14.8

Net income(loss) (15.3) (8.1) 1.0 1.0 16.3 9.1

Exchange rate(Yen/US$) 79 83 99 99 20 16Domestic standard

Naphtha Price(Yen/KL) 55,200 57,500 64,700 64,900 9,500 7,400

Items

(billion yen) ( ) Denotes a minus

1st Half Full year 1st Half Full year 1st Half Full year

Functional Chemicals 7.2 12.4 7.9 16.5 0.7 4.1

Functional PolymericMaterials 4.7 8.4 7.4 13.0 2.7 4.6

Polyurethane (1.8) (2.6) (4.1) (2.0) (2.3) 0.6

Basic Chemicals (7.0) (18.9) (8.0) (16.0) (1.0) 2.9

Petrochemicals 1.5 7.7 9.8 19.5 8.3 11.8

Films and Sheets (1.5) (3.3) 0.9 (0.5) 2.4 2.8

Total(including Others)

1.5 4.3 11.0 25.0 9.5 20.7

SegmentFY2012 FY2013 Increase(decrease)

4

Operating Income/Loss (by business segment)

-600

-400

-200

0

200

400

5

Operating Income from FY2008

08年度 09年度 10年度 11年度 12年度 13年度（予想）

▲7.1

28.723.1

17.4

▲19

9.5

▲9.5

25

1.5

14

2.811

21.6

4.3

Despite being on the recovery track, the outlook for the 2nd half is severe

（Aug.1 Outlook：16）↓

Lehman Shock

Accident at Iwakuni Works

(billion yen)

▲55.5

10

▲45.5

-European Financial Crisis-Economic slowdown in emerging

countries

40

20

0

-20

-40

-60FY08 FY09 FY10 FY11 FY12 FY13(Outlook)

▲ Denotes a minus

▲40.5

0

100

200

300

400

Operating Income (FY2012 Result → FY2013 Outlook)

12年度決算（変動要因） 13年度予想

FY13 Outlook25

4.3

FY2013 Effects of recovery from accident, etc.Operating income forecast 25 billion yen

▲9Accident at Iwakuni WorksPower trouble at Ichihara

(Operating Income: billion yen)

Sales Volume＋6

Price, etc＋2

Changes in FYat overseas subsidiaries

＋4

【Sales volume increase】PP-CPD, Elastomer,MR-monomers, Nonwovens,Agrochemicals

6FY12 Result (Factors in FY12/FY13) FY13 Outlook

【Positive factors】Exchange rates Formula gap of polyolefin salesImproved market prices （Elastomer）

【Negative factors】Market downturn （Phenol, Butadiene）

▲ Denotes a minus

7


8

Changes in Business Portfolio

PP-Compounds, AdmerTM, EvolueTM, TafmerTM, EPT, etc.

High Value Added Polymers

Ophthalmic Lens Monomers, Dental Materials, Nonwovens, Agrochemicals

High Functional Products

Phenol Chains

① Restructuring measures for volatile volume market business- Phenol, PTA, Polyurethane (TDI)

② Reinforce “High Functional Products” and “High Value Added Polymers”

Fundamental restructuring measures

9FY11 FY12

Business Portfolio Condition and Challenges

39

FY13（Estimate）

21.6 4.3

28

28

（Operating income: billion yen）

FY13（Outlook）

25



45

▲11▲20

- Steady progress for “High Functional Products” and “High Value Added Polymers”

- Sluggish conditions for volatile volume market products (Phenol, PTA, and Polyurethane)

Phenol, PTA, Polyurethane, etc.

27

▲23.7Market slump

▲ Denotes a minus

10

Condition of Business Restructuring

11

① Phenol Chains

② PTA

③ Polyurethane (TDI)

Issues in Volume Business Restructuring of Volatile Business

12

① Phenol - Supply and Demand -

China

Over supply after 2014 from new facilities and production increases in China

(unit: 10 thousand tons)

Surplus 300KTAHigh utility costs

Improvement in supply and demand in 2017

0

100

200

300

'12 '13 '14 '15 '16 '17

需要供給

0

100

200

300

'12 '13 '14 '15 '16 '17

需要供給能力Demand SupplyDemand Supply

Restructuring of Volatile Business

Japan

13

① Phenols – Conditions and Directions -

Under construction※JV with Sinopec

China SingaporeJapan

ChibaOsaka

640KTA

Shanghai250KTA

Singapore310KTA

-Competitive utility and low materials costs

-Strong sales structure

Competitive new plants

Optimization of plant operations

【Strengths in Phenol Business】-Sites in emerging ASEAN countries and China -Multiple derivatives and measures for surplus acetone

-Cooperation with influential partners

Local Production and Local Consumption

Cost Reduction

Regional Cooperation

Measures forhigh utility costs


1 2 3 4

② PTA - Local Production for Local Consumption -

SMPC(THA) Company A （THA） Company B （China） Company C （China）

101

105

100

107

◆SMPC (Thailand)：Secure world’s top class competitiveness through rationalization

14

（MCI estimate）

World’s TopCompetitiveness


15

Nghi Son Project - Secure competitive aromatics -

PH

PHPH

PTA

PTA

PTA

PH

- Competitive large scale refinery and petrochemical complex inrapidly growing Vietnam (Operation commencement: 2017 )

（Idemitsu： 35.1%, KPI： 35.1%, PVN： 25.1%, Mitsui Chemicals： 4.7%）

Paraxylene：700KTA

Benzene：240KTA

Secure a stable and competitive source for aromatics

(Increase in-house rate of paraxylene and benzene)

Nghi SonComplex


16

77% 79% 81% 83%80% 78%

84%87%

0

100

200

300

400

500

600

700

800

1-3月 4-6月 7-9月 10-12月 1-3月 4-6月 7-9月 10-12月

単位：千ｔ

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

需要生産量メーカー在庫稼働率

2012 2013

③ Polyurethane （TDI） - Supply and Demand -

Inventory rationalization through production adjustments and demand recoverypredicted to bolster improvements in supply and market in second half of FY2013

Demand (World)（thousand tons）

Maker inventoryProductionRun rates

Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec


17

③ Polyurethane (TDI) – Condition and Measures -

TDI

Saudi Arabia※License for TDI and MDI

to SABIC

Japan

Kashima117Omuta

120Reduction of exportto China

Expansion of export to ASEAN, Russia, the Middle East, Africa, and South America

【Measures】①Decrease in export dependence to China （50%→30%）②Cost reduction （FY15 target 8 billion yen→10 billion yen）③Reinforcement of system housing business

⇒ Study further measures

(thousand ton)


18


～Changes in Business Portfolio～

2011年度 2012年度 2013年度 2014年度以降

19

Progress of High Functional Products （1/2）

CHE） ACOMON acquisition

Secure global base

Further strengtheningposition as a top player

OphthalmicLens

Monomers

DentalMaterials

Nonwovens

SGP） SDC new base

JPN） Increase capacity(+15KTA)

GER） Heraeus Dental acquisition

USA.） DENTCA acquisition

KOR） KOC acquisition

CHN） New base(15KTA) Establish 3 bases in Asia

64KTA→94KTA

FY11 FY12 FY13 FY14～

Steady progress in High Functional Products through M&A

2011年度 2012年度 2013年度 2014年度以降

20

Agrochemicals

2011年度 2012年度 2013年度 2014年度以降

THA） Acquire stake in Sotus

BRA） Acquire stake in Iharabras

IND） Launch of insecticide

USA） Launch of fungicide

CHN） Launch of insecticide

EUR） Launch of fungicide

BRA） Launch of insecticide

THA） New R&D base

Establish global bases

Progress in legal registration

Progress of High Functional Products （2/2）


Dental Material Market： 800 billion yen

①Acquisition of Heraeus Dental

②Acquisition of DENTCADentures using CAD/CAM and 3-D printers

World’s 6th largest dental materials provider with sales in 22 countries

0

2,000

4,000

6,000

8,000

10,000

09 10 11 12 13 14 15 16

North .America South AmericaEU JapanAsia (excl. Japan) Others

（million US$）

Expansion of Dental Materials High Functional Products

- Global dental materials market will stably grow at a rate of 6-7% attributable to ageing of world population

- Material shift from metal to plastics

21

22

◆Expansion through global production and sales- Expansion of Heraeus Kulzer sales in Japan and Asia- Sales of Sun Medical products under Heraeus Kulzer brand

◆Joint development of new products using proprietary polymer technology

Business Plan of Heraeus Kulzer

0

20

FY12 FY13 FY14 FY15

5%

10%

Operating income （million €）

40

60

ROS（％）13%

Synergy

Strategies to strengthen competitiveness

Synergy


11年度 13年度 16年度 22年度 23

Agrochemicals

Acceleration of global deployment through new bases and registration

50

Target100

Japan

Overseas16%

24%32%

50%

40

【Register】IN/insecticideUS/fungicideCN/insecticideEU/fungicide

【Acquisition of stakes】TH) SotusBR） Iharabras

【New sales bases】Korea, Thailand, India,Vietnam, Brazil, Europe

37

【Register】BR/fungicide （2014）

【R&D base】Establish new R&D base in Thailand (Feb,2014)

【Development】Five next generation active ingredients

FY11 FY13 FY16 FY22

(Sales :billion yen）


24


～Changes in Business Portfolio～

2011年度 2012年度 2013年度 2014年度以降

Strengthen market share in Asia95KTA→170KTA

Strengthen position as world’s top provider

250KTA

EvolueTM

TafmerTM

EPT

2011年度 2012年度 2013年度 2014年度以降

Bio-Polyol

JPN） Increase capacity（+50KTA）

SGP） new base （300KTA、2015）Strengthen market share in Asia

250KTA→600KTA

SGP） Increase specialty Tafmer(8KTA）

CHN） New base（75KTA）

IND） New base（8KTA、2015）

Major Projects Scheduled for Start Up After FY2014

25

Progress of High Value Added Polymers （1/2）

FY11 FY12 FY13 FY14 & after

2011年度 2012年度 2013年度 2014年度以降

PP compounds

2011年度 2012年度 2013年度 2014年度以降

USA） Increase capacity （+14KTA）

26

+28KTA+14KTA

+14KTA

MEX） Increase capacity （+13KTA）+25KTA

+13KTA

BRA） Produmaster acquisition （+55KTA）

THA） Increase capacity （+18KTA）+15KTA

CHN） Increase capacity （+9KTA）+10KTA

AdmerTMCHN） New base

Secure position as global leaderwith 8 bases

and 1,000KTA capacity

Secure position as world’s top provider

Progress of High Value Added Polymers （2/2）


27

PP Compounds

U.S.A.

Mexico

Europe

India

China

Thailand

Japan

- Strengthen global capacity through expansions in U.S.A. and Mexico

- Study feasibility of establishing R&D base in Europe

Global leader with capacity of 1,000KTA (FY2014)

Contribute to global and local strategies of automobile manufacturers

BrazilProduction bases

Production andR&D bases

Company A MCI-G

99.295


28

Polyurethane) Bio-polyol

castor oil

・Establishment of New JV for Bio-polyol in India (Operation from Jan 2015)Production of bio-polyol from non-edible castor and contribute to CO2 reduction

* India is the world's largest hub in castor oil production

polyurethane foam automotive interiorBio-polyol

Outline of Joint Venture

Jayant Agro-Organics(50%)

Mitsui Chemicals(40%)

Itoh Oil Chemical (10%)

・ The world's leading producer of castor oil

・Largest supplier for automotive interior polyurethane foam materials・World’s only Bio-polyol manufacturer and supplier

・Japan's leader in castor oil production with high manufacturing technology and high quality control expertise (Joint venture agreement signing ceremony)

Topics High Value Added Polymers

castor

29

Expanding Bio-polyol in Asia High Value Added Polymers

Indonesia

Malaysia

Thailand

Foshan

Suzhou

Tianjin Japan

(India)Bio-polyol

Supply of competitive bio-polyol through 7 bases system house in Asia

castor castor oil Bio-polyol

Topics

30


1 2 3

FY2011-2013 Growth investments

Effect of Investments

High Functional Products(incl. Heraeus Dental)

Phenol Chains

Others

Investment effect (50 themes)

1.1

21

31

FY13 FY15 FY17


高付加価値ポリマー

高機能製品

ﾌｪﾉｰﾙ・ﾁｪｰﾝ

その他

1,300億円

Heraeus歯科材M&A

Focus 90% of growth investments on “High Functional Products” and “High Value Added Polymers”

Effect of growth investments during Mid-Term Business Plan willresult in rapid expansion after FY2014



Phenol Chains

Others

Heraeus Dental M&A

130billion yen

(billion yen)

31

(Appendix) Investment Themes

1.1

21

31

FY13 FY15 FY17

-Acetone based IPA-New phenol base in China

Over 50 ongoing investment themes

-Mega solar -Electrolyte solution-Improvement in consumption of acetic acid

-PP compounds (Capacity increase)

-Tafmer (Specialty grade)

-New EPT base in China -HZ Million

(Capacity increase)

-Heraeus Dental-ACOMON, KOC, SDC-Agrochemicals-Nonwovens

(New base, capacity increase)


Phenol Chains

Others


(Operating income: billion yen)

(reference)

13年度上13（計画）（実績）

合計 90 46

77 34

その他コストダウン（購買、物流等） 13 12

項目

ポリオレフィン　・汎用樹脂プラントの停止など

ウレタン　・コスト構造改革進捗（大牟田など）

フェノール、ＰＴＡ他　・用役コストダウン　・原単位改善　・省スチーム化など

東セロ合理化　・⽣産収率改善、販直費削減など

32

1st Half FY2013 Results : 4.6 billion yen

Progress in Cost Reduction

Target 9 billion yen

1stHalf FY13 FY13 Target

4.6Phenol, PTA, others

Film & Sheets

Others （Purchasing, Logistics）

Item FY13Target

1stHalf FY13Results

7.7 3.4

1.3 1.2

9 4.6

- Suspension of commodity plants

- Extensive restructuring (Omuta Works)

-Utility cost reduction-Improvement in consumption rate-Steam saving

-Improvement in productivity-Reduction of sales & administrative costs

Polyolefin

Polyurethane

Total

0

2,000

4,000

6,000

8,000

0.0

0.5

1.0

1.5

2.0(billion yen)

Interest-bearing liabilities

Equity

D/E ratio

1.53

1.31 1.25 1.271.36

1.49

FY08 FY09 FY10 FY11 FY12 FY13(forecast)

Financial Outlook

Heraeus Dental M&A

Note) excl. projected retirement obligations in FY13

800

600

400

200

0

2.0

1.5

1.0

0.5

0

Efforts to improve balance sheet

575

386

33

34

“Perfect Change in Business Portfolio”

Conclusion

◆Steady progress in expansion of

“High Functional Products” and “High Value

Added Polymers”

◆Clarify restructuring plan during FY2013

and execute the plan during the next

Mid-Term Business Plan

35

Ｃｈａｌｌｅｎｇｅ, Ｄｉｖｅｒｓｉｔｙ, ＯｎｅＴｅａｍ

Statements made in this document with respect to Mitsui Chemicals' current plans, estimates, strategies,and beliefs and other statements that are not historical facts are forward-looking statements about thefuture performance of Mitsui Chemicals.

Information provided here, other than historical facts, refer to future prospects and performance, and hasbeen prepared by Mitsui Chemicals management on the basis of currently available information. Thiscovers various risks, including, but not limited to, economic conditions (especially, customer demand),foreign currency exchange rates and other factors. As a result, actual future performance may differ fromany forecasts contained in this document.

Mitsui Chemicals has no responsibility for any possible damages arising from the use of this informationnor does Mitsui Chemicals have any obligation to update present forward-looking statements, or releasenew ones, as a result of new information, future events or otherwise.

This document may not include all the information Mitsui Chemicals has disclosed to stock exchangesor made public in other ways. Please be aware that the content on this document is subject to change ordeletion without advance notice.

Although Mitsui Chemicals has made careful efforts regarding the accuracy of the contents here, MitsuiChemicals assumes no responsibility for problems including, but not limited to, incorrect information, ormalicious tampering with the content of the data in this document by any third parties or problemsresulting from downloading. Furthermore, this website is not an offer or a solicitation of an offer to buyor sell securities. Please be aware that decisions regarding investing are the responsibility of usersthemselves.

CEO Explanation Business Results & OutlookDental Material Market：800 billion yen ①Acquisition of...

Documents

Transcript of CEO Explanation Business Results & OutlookDental Material Market：800 billion yen ①Acquisition of...